Anti-Money Laundering

When Your Client is not Human (August 2024)

Using an Agent to Verify Identity (May 2024)

Verifying the Identity of Clients Who Don’t have Photo ID (March 2024)

Source of Funds: How are You Paying for That? (January 2024)

Don’t be a Dupe (January 2024)

Do You Witness Financial Transaction Documents Remotely? Read This (December 2023)

The Law Society has prepared a series of detailed worksheets and some more simplified checklists, annotated to the rules, which will assist you in determining how the rules apply to each file.

You may want to develop your own checklists for your firm. We recommend that you use a checklist on every file so that you can satisfy the Law Society auditors that you have complied with the rules. Failure to comply with any of the rules without reasonable excuse may constitute professional misconduct.

On some files, you may only need to identify the client; on other files verification is required. Some client matters may be exempt from verification or identification requirements.   Similarly, on some matters you may accept cash and on other matters you may not.  You can download the worksheet(s) which apply to your client matter and proceed step-by-step through the process.

Client Identification and Verification

When it comes to the anti-money laundering rules, there are two categories of files.  We have included worksheets that should help you determine which category your file falls into.

The first type is an IDENTIFICATION FILE – where you must identify your client by collecting the basic “business card” information – name, address, occupation – information that you are probably already collecting so that you can communicate with your clients.

The second category of file is a VERIFICATION FILE – where you must verify your client’s identity.  Verification is required on any file where you provide legal services in respect of a financial transaction.  Financial transaction is defined to mean “the receipt, payment or transfer of money on behalf of a client or giving instructions on behalf of a client in respect of the receipt, payment or transfer of money.”

Verification requires certain steps if your client is an individual and different steps where your client is an organization and, in the case of an organization, the steps vary depending upon the nature of the organization. We have included worksheets that set out the steps required for each kind of client.

There are a few scenarios where, because of the nature of the file or the nature of the client, there is an exemption from having to verify the identity of the client.  We have a worksheet to help you determine whether a particular file is exempt from those requirements.

There also may be circumstances where the nature of the retainer changes which may require you to verify the client’s identity when you previously only identified the client.

While you can still retain the services of an agent to verify the identity of a client, you can no longer rely upon a guarantor to verify an individual’s identity.  These materials contain a sample agreement with an agent which sets out the manner by which the agent must verify the client’s identity.

One important change to the rules is that the payment of settlement funds in litigation files, even if they are pursuant to an Order of the Court or a Tribunal, is no longer exempt from the requirement that you verify the identity of the client.

Receipt of Cash

While you can accept cash that does not exceed an aggregate amount of $7500 either from a client or a third party on any one client matter, there are specific record keeping requirements when that cash is received.

Unless the matter falls within a narrow list of exemptions, cash cannot be received, either from a client or a third party, in an aggregate amount above $7500 on a client matter.

The Society has prepared a checklist that will take you through specific record keeping requirements when that cash is received and help you determine whether or not you can accept cash on a particular matter or whether you should direct the payor to attend upon a bank, deposit the cash and return to you with a bank draft.

1) Checklist For Every File

2) Exempt From Identification Checklist

3) Exempt From Verification Checklist

Identification Files

4) Client Is An Individual

5) Client Is A Financial Institution, Public Authority, Etc

6) Client Is An Organization

Verification Files

7) Client Is An Individual

8) Client Is An Organization Registered In Government

9) Client Is An Organization Not Registered In Government

10) Client Is A Trust

11) Verification Where The Client Is Not Physically Present & Sample Agent Agreement

12) Client Verification Record Keeping and Retention Checklist

Receipt of Cash

13) Receipt of Cash Checklist

Client ID Verification

A free online learning resource offering a quick review of client identification verification options.

Source of Funds: How are You Paying for That?

A free online learning resource offering a quick review of the source of funds requirement when your client’s matter involves a financial transaction.